Sharp Corp. has decided to spin off its small and midsize liquid-crystal display (LCD) business into a separate subsidiary, The Yomiuri Shimbun has learned.
The major electronics maker will stipulate the plan in a reconstruction programme to be compiled in May, according to sources.
Sharp has reportedly been discussing the plan as the key focus of its reconstruction programme with its main financing banks, including Mizuho Bank and the Bank of Tokyo-Mitsubishi UFJ.
The two banks will consider the concrete financial support measures being requested by Sharp with the company's split-up plan in mind, the sources said.
While some officials within Sharp hoped to keep the LCD business for smartphones and other devices within the company, it eventually decided that increasing the transparency of the business by spinning it off into a separate firm would attract more financial resources for growth.
Sharp intends to hold a majority stake in the newly created subsidiary, and place its LCD business at the centre of its reconstruction programme, according to the sources.
The company reportedly will establish a system in which the planned LCD subsidiary is able to accept investments from outside or tie up with another company as early as by the end of this fiscal year.
The company will further consider details of the plan, such as whether to make the LCD business an in-house company before spinning it off into a separate company, the sources said.
At the same time, Sharp will begin full discussions to clarify its management responsibility regarding the LCD company.
While Sharp President Kozo Takahashi is expected to stay on as president, the company will consider the possibility of effectively reducing his remuneration to zero.
Other executive officials are expected to be replaced or face pay reductions, according to the sources.
If remuneration for the company's top executive is reduced to zero, it will be the first measure of this kind since Sharp was established, including during a previous financial crisis in which the company was at risk of having an insufficient cash flow.